Stock Futures Gain Amid Wagers Selloff Overdone: Markets Wrap

(Bloomberg) — US stock futures pointed to gains on Wall Street as some investors took advantage of a bruising week as an opportunity to buy. Equities and the euro surged in Europe on expectations for a big boost to defense spending. 

Contracts on the S&P 500 added 0.4% and futures on the Nasdaq 100 gained 0.7%. Tesla Inc. led premarket increases among the Magnificent Seven stocks after recording its biggest monthly decline in about two years. Some sentiment and positioning indicators suggest stocks are already oversold, according to HSBC strategists.

“How much more cautious can the market get?” Katrina Dudley, senior investment strategist at Franklin Templeton, said on Bloomberg TV. “If you look at that fear and greed index, we are right in the red zone that flashes and says: caution.” 

Bitcoin traded around $92,000, paring some of its weekend gains after US President Donald Trump’s latest comments about a strategic reserve for the coins. Cryptocurrency-exposed stocks including MicroStrategy Inc., Coinbase Global Inc., and Riot Platforms Inc. rallied.

 

In Europe, defense and automaker stocks helped lift the Stoxx 600 benchmark more than 1%, while France’s CAC 40 Index and the UK’s FTSE 100 hit records. 

Regional leaders rallied behind Ukraine and accelerated plans for increased military spending after a televised fallout between Trump and his Ukrainian counterpart Volodymyr Zelenskiy on Friday.

“The US turnaround is certainly a historic opportunity for Europe to tackle the subject of an autonomous European defense with potentially very positive economic ramifications,” said Christopher Dembik, senior investment manager at Pictet Asset Management. “But beware of excessive optimism.”

BAE Systems Plc soared 13%, Rheinmetall AG gained 10% and Saab AB gained 9%. The euro jumped 0.9% against the dollar, while the Polish zloty and Hungarian forint led gains among emerging-market currencies.

Bonds in Germany and France fell on the expectations for increased issuance. Germany’s next government is exploring options for large-scale investments in defense and infrastructure spending which could amount to hundreds of billions of euros, according to Reuters.

Beyond the military spending boost, shares in European carmakers gained sharply after the EU said it would grant the companies leeway in reaching 2025 CO2 emission targets.

US Tariff Deadline

Now markets are bracing for a looming March 4 tariff deadline, with potential US levies of 25% on Canada and Mexico and an additional 10% on China. 

If implemented, the new tariffs would apply to roughly $1.5 trillion in annual imports, making them some of the most sweeping of the Trump era.  

Investors are still holding out hopes for a last-minute delay, following an initial deadline extension. In China, President Xi Jinping is expected to unveil new stimulus at the National People’s Congress this week that could bolster the economy in the face of the looming trade restrictions.

Trump Heads Toward Tariff Barrage on Canada, Mexico, China

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Key events this week: 

• Eurozone CPI, HCOB manufacturing PMI, Monday
• UK S&P Global manufacturing PMI, Monday
• Japan unemployment, Tuesday
• Eurozone unemployment, Tuesday
• US President Donald Trump’s speech to a joint session of Congress, Tuesday
• Australia GDP, Wednesday
• China Caixin services PMI, Wednesday
• China’s National People’s Congress, Wednesday
• Eurozone HCOB services PMI, PPI, Wednesday
• BOE Governor Andrew Bailey and colleagues speak, Wednesday
• Eurozone retail sales, ECB rate decision, Thursday
• Eurozone GDP, Friday
• US nonfarm payrolls, consumer credit, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.4% as of 8:24 a.m. New York time
• Nasdaq 100 futures rose 0.7%
• Futures on the Dow Jones Industrial Average rose 0.2%
• The Stoxx Europe 600 rose 1.2%
• The MSCI World Index rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index fell 0.4%
• The euro rose 0.9% to $1.0467
• The British pound rose 0.9% to $1.2686
• The Japanese yen fell 0.4% to 151.20 per dollar

Cryptocurrencies

• Bitcoin fell 1.3% to $93,091.39
• Ether fell 6.1% to $2,371.39

Bonds

• The yield on 10-year Treasuries advanced four basis points to 4.25%
• Germany’s 10-year yield advanced 10 basis points to 2.51%
• Britain’s 10-year yield advanced 11 basis points to 4.59%

Commodities

• West Texas Intermediate crude rose 0.6% to $70.15 a barrel
• Spot gold rose 0.5% to $2,871.10 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Greg Ritchie, Matthew Burgess, Julien Ponthus, Allegra Catelli, John Cheng, Michael Msika and Catherine Bosley.

(An earlier version corrected Zelenskiy’s title.)

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